Correlation Between Transamerica Emerging and Cambiar Opportunity
Can any of the company-specific risk be diversified away by investing in both Transamerica Emerging and Cambiar Opportunity at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Transamerica Emerging and Cambiar Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Emerging Markets and Cambiar Opportunity Fund, you can compare the effects of market volatilities on Transamerica Emerging and Cambiar Opportunity and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Transamerica Emerging with a short position of Cambiar Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Emerging and Cambiar Opportunity.
Diversification Opportunities for Transamerica Emerging and Cambiar Opportunity
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Transamerica and Cambiar is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Emerging Markets and Cambiar Opportunity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Opportunity and Transamerica Emerging is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Transamerica Emerging Markets are associated (or correlated) with Cambiar Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Opportunity has no effect on the direction of Transamerica Emerging i.e., Transamerica Emerging and Cambiar Opportunity go up and down completely randomly.
Pair Corralation between Transamerica Emerging and Cambiar Opportunity
Assuming the 90 days horizon Transamerica Emerging Markets is expected to under-perform the Cambiar Opportunity. In addition to that, Transamerica Emerging is 1.0 times more volatile than Cambiar Opportunity Fund. It trades about -0.17 of its total potential returns per unit of risk. Cambiar Opportunity Fund is currently generating about 0.28 per unit of volatility. If you would invest 2,981 in Cambiar Opportunity Fund on September 4, 2024 and sell it today you would earn a total of 130.00 from holding Cambiar Opportunity Fund or generate 4.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Transamerica Emerging Markets vs. Cambiar Opportunity Fund
Performance |
| Timeline |
| Transamerica Emerging |
| Cambiar Opportunity |
Transamerica Emerging and Cambiar Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Emerging and Cambiar Opportunity
The main advantage of trading using opposite Transamerica Emerging and Cambiar Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Emerging position performs unexpectedly, Cambiar Opportunity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cambiar Opportunity will offset losses from the drop in Cambiar Opportunity's long position.The idea behind Transamerica Emerging Markets and Cambiar Opportunity Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Cambiar Opportunity vs. Cambiar International Equity | Cambiar Opportunity vs. Cambiar Small Cap | Cambiar Opportunity vs. Cambiar Opportunity Fund | Cambiar Opportunity vs. Cambiar Smid Fund |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.
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